Reid called it a stunt. Of course, Reid was referring to McConnell’s attempt to get it before the Senate for a vote. But if McConnell was more agile he should have said, “At last we agree. Obama’s fiscal plan is a stunt. That’s why I laughed in Geithner’s face.”

But this is why Boehner needs to call Obama’s bluff. Bring this abortion to the House for a vote. All the Republicans vote present. Dare the Democrats to vote for economic suicide. If they do, send it to the Senate.

Article I Section 8.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;

Liberals are now bleating that the ObaMessiah can “invoke” 14th Amendment authority to raise the debt limit. I’ve called them historically illiterate and economically illiterate but it turns out they are illiterate in every sense of the word.

This is the part that they think gives Da Won justification to just seize power over borrowing:

Amendment 14 – Citizenship Rights

4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

This is the part that’s over their head:

5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

There are only five provisions of that article. Apparently they can’t count to five. Or the libtard masterminds who tell the other libtards what to think left that part out, knowing their Obamabot minions either can’t read or won’t go to the original source and read. Because reading is hard.

Steve, worse that section of the 14th Amendment is clearly aimed at requiring readmitted states to acknowledge the debt burden of the Union costs of the war (and also requiring them to repudiate all Confederate debt). It speaks to nothing before or since.

Steve, I hate to break it to you, but Congress has not directly borrowed money since about WW1. Since then it has merely authorised the Treasury to do the borrowing, and this proposal would be no different. Unwise, but perfectly constitutional, or at least as constitutional as any borrowing of the past century.

Steve, worse that section of the 14th Amendment is clearly aimed at requiring readmitted states to acknowledge the debt burden of the Union costs of the war (and also requiring them to repudiate all Confederate debt). It speaks to nothing before or since.

Wrong. That was the reason for the clause, but its language does not limit it to the war debt. It applies equally to any debt of the USA that is contracted today. The problem with the argument the Democrats are making from that clause is that it has nothing to do with the current debate.

Nobody is proposing calling into question “public debt of the United States, authorized by law”. What I think the Ds mean by it is that if the president should illegally and without authority borrow money, it could then not be questioned, and thus could be enforced in court as if it were legal. Even if they were right, this would still mean the president would be breaking the law and his oath, they just don’t care. But they’re wrong, because such debt would not be “public debt of the United States, authorized by law”.

Steve, I hate to break it to you, but Congress has not directly borrowed money since about WW1. Since then it has merely authorised the Treasury to do the borrowing, and this proposal would be no different. Unwise, but perfectly constitutional, or at least as constitutional as any borrowing of the past century.

But this would be an entirely different animal. Congress and only Congress has the authority to control the purse strings. That includes determining how much debt we take on.

How that is done is rightfully done by Congress. I don’t see how it violates the separation of power for Congress to authorize via legislation a certain level of borrowing (the debt limit) and directing the executive to execute.

Just like any other piece of legislation. Congress doesn’t execute any of its own laws. But nowhere in the Constitution do I see how Congress can simply delegate its constitutionally specified powers to the Executive.

How is the President not legislating when he assumes the power to determine how much we will borrow against the credit of the US, cutting Congress entirely out of the loop entirely?

Also consider; should Congress buy this argument, and gave the executive via legislation the authority to borrow to an unlimited extent. This puts the Congress in the position of reasserting its constitutional authority via another piece of legislation.

Obama could theoretically veto that bill. And we all know that’s not theoretical; he would veto the bill.

How can any branch of the government constitutionally give another branch of the government veto power over its constitutional powers?

How is this idiocy not an unconstitutional delegation? How does that not violate the separation of powers, similar to the line item veto?

How that is done is rightfully done by Congress. I don’t see how it violates the separation of power for Congress to authorize via legislation a certain level of borrowing (the debt limit) and directing the executive to execute.

Just like any other piece of legislation. Congress doesn’t execute any of its own laws. But nowhere in the Constitution do I see how Congress can simply delegate its constitutionally specified powers to the Executive.

Until about 100 years ago Congress used to borrow money directly and then make it available to the treasury. Then it started delegating the borrowing to the treasury. Nowhere does the constitution say that such a delegation must have a limit. If Congress can authorise the treasury to borrow an additional trillion dollars, then it can equally authorise the treasury to borrow whatever sum it sees fit. This would be a very bad idea, but I don’t see anything in the constitution to prevent it.

Congress and only Congress has the authority to control the purse strings. That includes determining how much debt we take on.

I don’t see those words anywhere in the constitution. What you’re describing is a desirable situation, but there’s nothing in there about “purse strings” or “level of debt”, just about “borrowing money”.

How is the President not legislating when he assumes the power to determine how much we will borrow against the credit of the US, cutting Congress entirely out of the loop entirely?

Congress would have legislated when it gave him that authority. He’d merely be filling in the amount. It would be no different than any other delegation of power, such as every regulatory agency has. The “nondelegation doctrine” died a long time ago.

1) Tax rates raised on the highest brackets. He gets this automatically if we go over the fiscal cliff, and certainly the opponents of raising the top two brackets will be in awweaker position.

It is a political victory and fulfillment of campaign pledge he wants and he doesn’t really care about anything else. Offer him deduction limits – he’ll take it and still ask for a riose in marginal tax rates. In his mind that’s maybe the onlky thing some people understand, and if he does that also, it’ll be easier for him he thinks toi justify entitlement cuts or increases in other taxes.

He is willing to settle for something less than full the Clinton tax rates. There is room to do something here.

2) Only one comprehensive budget negotiation that must include the debt ceiling rise. Preferably he’d like it to be out of the way for the rest of his presidency.

He’ll probably settle for less, but really, really would like it to be good for at least two years.

He won’t do any complex negotiation (meaning one that includes spending cuts) that doesn’t involve raising the debt ceiling.

He knows that the debt ceiling rise is coming up in only a few months anyway.

Then how can the EPA, the FDA, the SEC, or any other agency make regulations? Back when there was a nondelegation doctrine they couldn’t. Explain how filling in the amount on a borrowing authorisation is different from filling in the amount on a speed limit or BAC limit.

The line item veto was struck down, not because of any nondelegation doctrine, but because it violates the presentment clause. Congress could say in every appropriation bill that the president may spend the money but doesn’t have to. Then the president could sign the whole thing and only spend the bits he agrees with. And of course he could request amendments to any bill before signing it. But Congress can’t just amend the constitution by letting him veto only part of a bill it has passed.

Steve57, my friend, Congress delegates to the Executive branch all the time. The constitutional standard for when this is acceptable is – greatly oversimplified – simply that Congress must provide the executive branch the authority to make regulations and some guidelines within which to do so.

Wrong. That was the reason for the clause, but its language does not limit it to the war debt.

That really does depend on whether you are a textualist or not. An originalist might differ, someone who looked at the legislative history might really differ, and a “living constitution” type might decide nearly anything.

There’s no telling what “living constitutionalists” might say, but anyone who actually believes the constitution means what it says agrees that the original reason for a clause’s inclusion does not modify its effect.

Until about 100 years ago Congress used to borrow money directly and then make it available to the treasury. Then it started delegating the borrowing to the treasury. Nowhere does the constitution say that such a delegation must have a limit. If Congress can authorise the treasury to borrow an additional trillion dollars, then it can equally authorise the treasury to borrow whatever sum it sees fit. This would be a very bad idea, but I don’t see anything in the constitution to prevent it.

But I’ll betcha that when they did that, they also said that it was OK because Congress was still setting limits. This would remove the last vestiges of the old system.

But I’ll betcha that when they did that, they also said that it was OK because Congress was still setting limits.

No, why would they say that? The nondelegation doctrine is dead. There is no such thing. In any case, the president’s borrowing authority wouldn’t be unlimited, because he still couldn’t spend anything that Congress hadn’t appropriated; so it would in effect allow him only to borrow (in Congress’s name, just as he does now) as much as is necessary to spend the money that Congress has ordered him to spend. What could be more logical than that? It’s a bad idea, but there’s no constitutional problem with it.

There’s no telling what “living constitutionalists” might say, but anyone who actually believes the constitution means what it says agrees that the original reason for a clause’s inclusion does not modify its effect.

“Modify” no. “Limit” perhaps. The words do not exist in a vacuum. And certainly when the intent is to expand the meaning past the written text, the really limited reason for the text ought to matter. Were it not for the clear historical background, the 2nd Amendment would still be about “the militia.”

I would say one huge difference, as opposed to those other limits you mention, is that the Constitution specifically mentions debt. And only Congress has control over it.

Giving the executive the power to put us into as much debt as he possibly can doesn’t change the fact that only he Congress has the power to pay the debt.

How can it not violate the separation of powers to give the executive via statute unilateral authority to put the country into debt, while the executive has no constitutional authority to pay the debt?

And given that only Congress can pay the debt, how could the President veto any follow-on legislation by Congress to regain control over the size of the debt? Because if this notion is Constitutional that’s exactly the position Congress would be in.

It’s a constitutional absurdity any way you look at it.

How is that different from legislating away its power to legislate? The Constitution gives Congress power to borrow, and once given away is at the mercy of the executive to get it back? I don’t see how Congress can give the President veto power over its Constitutional powers even if it wanted to.

So, you think that Congress was within its rights to set up the CFPB, with a budget immune to Congressional control or even scrutiny? That the Medicare Independent Payment Advisory Board being immune to Congressional repeal is OK? Or the IPAB’s ability to make actual law if Congress doesn’t act?

Are there no limits on Congress’s ability to give power to the executive?

And the second amendment is a collective right, like the right to assemble. Otherwise what is the distinction between keep and bear? And examine the corresponding clause in the articles of confederation.

At that time, it was much more likely the collective right would be abolished than the personal one that’s why it talks about the collective right of “the people”. Actually it is more of a “power” than a right.

Debt ceiling is kind of a misnomer. No debt can ever be borrowed until it is authorized. At one time Congress used to authorize many separate issues of debt.

Now a lot of debt is authorized. But there’ anumber.

Now you could make it trillion quadrillion Dollars.

Comment by Sammy Finkelman (dcc9ca) — 12/6/2012

My view is that the concept of a debt ceiling is intended to convey the illusion that this is all under control. That experts have determined a responsible limit to the national credit card, and we’re going to live within it. So no need to fret about the details of how to pay this debt. It’s all good.

However, for all its flaws, the debt ceiling has become an apparent limitation on government spending, and we can’t very well take that for granted these days.

And the second amendment is a collective right, like the right to assemble. Otherwise what is the distinction between keep and bear?

Um, excuse me? What is the similarity between those two verbs? They’re completely different things. One may keep arms in ones home, and/or one may bear arms; the 2nd protects the right to do either or both. One may also make or destroy arms, buy and sell them, beat them into plowshares, use them as paperweights, or build a tower out of them; these activities are not explicitly protected, though buying and selling are probably implicitly protected.

You don;’t need to declare war to have a war. And it wasn’t even so then. In 1778 France never declared war on Great Britain.

Nor did anyone declare the quasi-war between the USA and France in the 1790s, but the courts nonetheless recognised that it was a war. And 70 years later the courts recognised that the Civil War began when the first shot was fired, not when Congress got around to declaring it.

Sammy’s probably correct that the right to assemble is a collective right, simply because of its nature. And I guess so are the rights to get married and to have children, for the same reason. I can’t think of any other such rights, though.

Yes, it can, and it does, but the amount of money is limited. There’s even more money than can be shifted around.

I think SPQR may have meant that Congress can’t authorise the president to spend as much money as he likes. It can appropriate money for him to spend on whatever he likes, but it still has to appropriate a specific sum. Its right to delegate the legislative power is also limited; it must set out a subject matter and general guidelines for the agency to follow, and the agency may not be arbitrary or capricious in its application of those guidelines, whereas Congress itself may be as arbitrary as it likes so long as it sticks to its enumerated powers.

No, it doesn’t. It mentions borrowing, which we’ve already established Congress can delegate. It says nothing at all about the debt level.

Comment by Milhouse (15b6fd) — 12/6/2012 @ 5:25 pm

I didn’t say the Constitution mentioned the debt level. Just debt.

Article I Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

I’m not trying to be obtuse. I just don’t see how Congress could authorize the President to borrow as much as he wishes can possibly be consistent with the fact only Congress can pay the debt.

The executive obligates the legislative to pay debts it had no hand in making? Stop me if I’m wrong, but that’s no Congressional “power” at all.

Or the legislative refuses to pay the debt?

I honestly don’t understand how the Congress could give the President unilateral control over the debt limit and the government could be construed as functioning under a constitutional framework not matter how much anyone might stretch the term.

SPQR, what you wrote was ‘Congress can’t just pass a bill that says “President Obama can go spend money however he likes”’. Sammy took that literally, and quite rightly objected that it can. It just has to say how much money he can spend however he likes.

Steve57, you’ve got yourself confused because you keep forgetting that in essence Congress does not actually “do” anything. They don’t carry out their legislation.

In the case of the debt, Congress has historically divided up the budget into several pieces. The first is appropriating money. Congress does this in two ways, discretionary funding and mandatory funding – the latter what we call entitlements. All of the discretionary funding bills have language in them of a form that says that the funds are appropriated out of what funds are actually available.

Then separately, Congress passes a debt ceiling that allows the Executive branch to supplement the revenues collected by taxation by issuing debt under that authority to get enough funds to fill up the pot and pay the discretionary appropriations.

I’m not trying to be obtuse. I just don’t see how Congress could authorize the President to borrow as much as he wishes can possibly be consistent with the fact only Congress can pay the debt.

What’s the connection between the two? How does one contradict the other? Congress would be foolish to give the president such authority, but how does the clause you quoted prevent it from doing so?

The executive obligates the legislative to pay debts it had no hand in making?

There are at least three things wrong with that question. 1) Why not? 2) Congress did have a hand in making that debt; it authorised the president to borrow in its name. 3) That clause doesn’t obligate Congress to pay the USA’s debt, it authorises it to do so.

Stop me if I’m wrong, but that’s no Congressional “power” at all.

So where in the constitution does it talk about “power”?

Or the legislative refuses to pay the debt?

It could just as easily refuse to pay the limited debt that it currently authorises, or indeed the debts that it used to incur directly. The creditors would then sue the USA, like anyone with a legal claim against it.

It would be especially foolish for the GOP to allow an unlimited ceiling when the Democrats refuse to adopt a budget – contrary to law – for four f’ing years. Because it should be the budget that provides the implicit debt limit – rather than a huge stack of uncorrelated appropriations bills.

Though I rather like Sammy’s idea of getting rid of the budget altogether, and just funding each law directly as it is passed. It’s not as if Congress ever actually stuck to its budgets, even when it used to pass them.

SPQR, I may be confused but I don’t believe you’ve quite hit the nail on the head.

I have no problem distinguishing between revenues raised by taxation or supplementally by borrowing (although I’d humbly submit they are both revenue raising measures and therefore must originate in the House.)

My issue is this; the Constitution doesn’t contradict itself. The 14th Amendment states “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

So what does this mean if Congress eliminates its control over how much is borrowed against US credit by delegating that power to the executive?

Well, if no one not even Congress can question the debt then we no longer have three coequal branches of government. Congress has subordinated itself to the executive and must pay off whatever the President decides to borrow.

Congress has become the sugar daddy to our first gay president, having given him the AMEX platinum card with no limit.

But worse. A sugar daddy could cancel the card. Congress can’t; Obama would have veto power over any attempt to get the credit card back.

Given that scenario, the only leverage I can see that’s left is that Congress could exercise its Article I power to pay the debt and only pay a certain amount of debt. But that would mean, despite what the 14th says, the debt of the US isn’t valid and can be questioned.

How could the Congress, any Congress, delegate to the executive the power to borrow without creating contradictions within the Constitution that otherwise wouldn’t have existed?

The Second Amendment is both a collective right and an individual right, Sammy. Of course, as a free people, we have the right to raise armies and arm them with 4,000 nuclear warheads. And as a free people, we have the right to keep and bear arms without some general telling us whom to shoot them at. Makes us different from North Korea.

Given that scenario, the only leverage I can see that’s left is that Congress could exercise its Article I power to pay the debt and only pay a certain amount of debt. But that would mean, despite what the 14th says, the debt of the US isn’t valid and can be questioned.

If you don’t pay a bill, does that mean you’re disputing its validity?! All the 14th says is that the debt’s validity can’t be questioned. If Congress authorised it, nobody can go into court and claim that it isn’t valid. That doesn’t automatically mean it can’t refuse to appropriate money for paying it. It can do that, just as it can refuse to appropriate money for paying the president, or Article 3 judges, or the Capitol janitors. And without Congress’s appropriation, the president can’t pay any of those things, despite the USA’s legal obligation to do so.

“My issue is this; the Constitution doesn’t contradict itself. The 14th Amendment states “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

So what does this mean if Congress eliminates its control over how much is borrowed against US credit by delegating that power to the executive?

Well, if no one not even Congress can question the debt then we no longer have three coequal branches of government. Congress has subordinated itself to the executive and must pay off whatever the President decides to borrow.”

Steve57, your three paragraphs talk about three entirely different ideas which you seem to be conflating for reasons I can’t understand. Your second paragraph/sentence is especially confusing. Congress can’t “eliminate” its control over how much is borrowed. The executive branch can’t spend money that hasn’t been appropriated. If Congress does not pass an appropriations bill, the executive can’t spend money. The executive isn’t going to go out and borrow a trillion dollars and then leave it in the Treasury. What people are saying is that Congress can do this:

(1) Legislate that the Federal govt can tax X dollars.
(2) State that the executive can borrow any needed dollars.
(3) Appropriate X+Y dollars in appropriations bills.
(4) Watch as the executive borrows Y dollars.

None of that “questions” the validity of the debt. You seem to think that by not specifying the exact dollar amount authorized to be borrowed in an explicit bill that Congress is somehow “subordinating” itself.

73. Given that scenario, the only leverage I can see that’s left is that Congress could exercise its Article I power to pay the debt and only pay a certain amount of debt. But that would mean, despite what the 14th says, the debt of the US isn’t valid and can be questioned.

If you don’t pay a bill, does that mean you’re disputing its validity?!

As a personal aside, yeah, that’s usually what it means. Actually in my personal life that’s always what it meant. But I digress.

All the 14th says is that the debt’s validity can’t be questioned. If Congress authorised it, nobody can go into court and claim that it isn’t valid. That doesn’t automatically mean it can’t refuse to appropriate money for paying it. It can do that, just as it can refuse to appropriate money for paying the president, or Article 3 judges, or the Capitol janitors. And without Congress’s appropriation, the president can’t pay any of those things, despite the USA’s legal obligation to do so.

Comment by Milhouse (15b6fd) — 12/6/2012 @ 9:37 pm

I don’t somehow think we’re on the same page when discussing debt limits.

Steve57, do you realize that if a court awards a monetary judgment against the United States, that the winning plaintiff does not get paid unless and until Congress passes an appropriation bill that authorizes payment of the judgment?

Ordinary things like a tax payer getting a tax court to rule their way on a tax bill they paid are paid out of the ordinary course, but above certain preauthorized limits, the plaintiff waits for Congress. There are several outstanding multi-million dollar judgments against the US waiting for Congressional action every year.

None of that “questions” the validity of the debt. You seem to think that by not specifying the exact dollar amount authorized to be borrowed in an explicit bill that Congress is somehow “subordinating” itself.

Well, actually I was thinking that by committing itself to writing a blank check Congress was subordinating itself.

Wnen was the last time Congress actually passed real, honest-to-God appropriation bills for all (or nearly all) spending? Near as I can tell, they’ve been punting for years and years with continuing resolutions that allow most all ongoing spending to continue pretty much as the executive wants.

For example, how does Barack Obama get away with spending as much money as he wants on food stamps, waiving rules he has no power to waive? Did they actually appropriate it? Or does the President just dare them to impeach him and spend it anyway?

For example, how does Barack Obama get away with spending as much money as he wants on food stamps, waiving rules he has no power to waive? Did they actually appropriate it? Or does the President just dare them to impeach him and spend it anyway?

It’s undermining the whole reason for the separation of the different branches of government. What’s really scary is, ask any Obama supporter what they think of Barry’s attempts to underming the Legislative Branch, and they’ll say it’s a good thing.

“There is only one thing this nation’s economy needs, and that is a big reduction in federal spending.

We sure won’t get that from Barack Obama. Spending is Obama’s middle name; or it would be, if his middle name wasn’t … something else. He is actually demanding more money for federal government programs, 1.6 trillion more.

In his November 28th speech, Obama threatened that, quote:

If Congress does nothing, every family in America will see their taxes automatically go up at the beginning of next year. Starting January 1st, every family in America will see their taxes go up. A typical middle-class family of four would see its income taxes go up by $2,200 …

Speaking for my own middle-class family of four, I say: Bring it on.

It’s a pretty good rule of economic sanity that you should pay for what you get, to an amount at least as much as the thing costs. If middle-class Americans want all these federal programs, well, let them damn well pay for them. We’ve gotten into the mess we’re in by pretending you can have things without paying for them. Let’s drive a wooden stake through that great collective illusion.

You want Medicare for your grandma and grandad? Pay for it. You want tens of thousands of soldiers in Germany, Italy, Japan, and Korea? Pay for them. You want federal bailouts for union-whipped auto manufacturers and too-big-to-fail financial institutions? Pay for them. You want billions in foreign aid, farm subsidies, high-speed rail, refugee resettlement, the Pigford scam, contraceptives for university students, gun-running operations to Mexican bandits, protection for spotted owls, and crackpot education schemes that promise to make dumb kids smart? You want those things? Well, then, pay for them, dammit.

If you don’t want those things, why do you vote for politicians who keep them alive? In particular, why did a majority of you vote for Barack Obama?

Bring it on! If the great American public wants their federal government to spend another 1.6 trillion dollars, let’s raise the revenue to pay for it. Where from? From the great American public. Where did you think? The Revenue Fairy? Yes, that’s pretty much what people have been thinking the past few decades.

Our country is knee-deep in debt because we haven’t been earning to pay for what we’ve been getting. Instead, we’ve been borrowing to pay for it. When you borrow money, it eventually comes due, principal and interest.

The British and French governments borrowed a ton of money from the U.S.A. to pay for World War One. In the twenties, when the repayments were getting to be onerous, it was suggested to President Calvin Coolidge that the debts be forgiven, or scaled down, or at least restructured. Coolidge replied in the negative. When pressed, he said, immortal quote: “They hired the money, didn’t they?”

We’ve been hiring a whole lot of money, and it’s time we dropped the habit.

Speaking of unicorns, or to give an example of “I’ve got some good news and bad news. First the good news…”

washingtonpost.com, December 7:

The unemployment rate dipped and job creation remained steady in November, as the U.S. economy shrugged off any major impact from Hurricane Sandy and showed surprising resilience in the run-up to the fiscal cliff.

The November jobs report, released Friday morning, was a pleasant surprise to analysts who had braced for some ugly numbers for a period when much of the Northeast was reeling from the superstorm. In fact, the national unemployment rate fell to 7.7 percent from 7.9 percent, and the nation added 146,000 jobs, not the mere 85,000 that forecasters had expected.

But the report contained some ominous elements, as well. The jobless rate dropped in large part because the labor force fell by 350,000, suggesting that people gave up looking for work. The number of people saying they had a job actually fell by 122,000. And the Labor Department revised downward its estimates of job creation in September and October by a combined 49,000 jobs.

The last paragraph makes me think of the comment: “And other than THAT, Mrs. Lincoln, how was the play?”

BTW, in the midst of the Great Depression back in the 1930s, unemployment rates did drop for various select years in a surprisingly impressive manner—and that’s when government policies truly did spook the investment community (eg, income tax rates up to the high 70-percentile range). So I don’t believe that fudging with figures (eg, by government agencies) is the reason that an economy is necessarily displaying anything more than natural ebb and flow.

OT, but I feel obligated to keep y’all up to date on the fight in Illinois to replace congressman Jesse Jackson Jr. who recently resigned:

Dec.6, 2012 A veteran Illinois state senator charged with trying to board a
flight with a gun and ammunition in a carry-on bag is out on bail.
A Cook County judge set bond at $25,000 for state Sen. Donne Trotter, who
recently announced he was running for Jesse Jackson’s old seat in Congress.
Trotter’s defense attorney argued for reasonable bail citing Trotter’s decades
of public service and 26-year marriage.
The Chicago Democrat was released from custody a short time later. He refused
to answer reporters’ questions before walking away from the courthouse.
Trotter was going through security at Chicago’s O’Hare International Airport
yesterday when an X-ray screening spotted an unloaded handgun and a clip with
six bullets in his garment bag.

The best part, JD, is that Trotter personally voted for the state law he is now charged with violating so it is hard for him to suggest he is unaware of the law.…

It is unlawful for any person to board or attempt to board any commercial or charter aircraft, knowingly having in his or her possession any firearm, explosive of any type, or other lethal or dangerous weapon.

Trotter was going through security at Chicago’s O’Hare International Airport yesterday when an X-ray screening spotted an unloaded handgun and a clip with six bullets in his garment bag.

This is only supposed to happen to people who live in states with few gun control laws. People get used to carrying guns around with them and forget they’ve taken it with them to an airport.

I think he could have checked the bag if he’d remembered – even if he couldn’t check the bag, because the gun wasn’t secured or something (or not legal for him to possess in the state he was going to) he would not have been arrested, but would just have had to do something about the gun.

That’s why I believe his claim that he had forgotten he had it. He couldn’t possibly be dumb enough to know it was there and think that it wouldn’t be discovered. He might have thought that when it was found, telling them who he was would get him out of trouble, but there was nothing reported about him attempting to do so; either it happened and wasn’t reported, or he didn’t attempt it because he knew it wouldn’t work, which brings us back to the likelihood that his excuse of having forgotten it was there is true.

I understand that. One could borrow money and not spend it. But interest over and above that is still part of the debt.

In this case, though, it’s a distinction without a difference. Obama isn’t demanding simply the ability to borrow money for the sake of borrowing money. He’s demanding that he should be authorized to borrow whatever money he needs to in order to cover whatever payments on “America’s obligations” he needs to pay now.

He’s demanding the borrowing to cover his spending.

Let me try to rephrase so you see my dilemma.

The rationale behind the President’s demand for unilateral unilateral ability to raise the debt limit is to avoid default on the debt. Which in and of itself is an absurdity.

They have seized upon the language of the 14th Amendment, “The validity of the public debt of the United States…shall not be questioned,” and are essentially arguing that Congress is in breach if it automatically doesn’t raise the debt limit because by not doing so it is questioning the the validity of the debt.

Obama is demanding control over the debt ceiling so he can create more debt in order to borrow from Peter to pay Paul.

As SPQR points out anything that exceeds x+y (where x=tax revenues and y=congressionally authorized borrowing) = congressionally authorized appropriations. Currently paying any valid debts such as multi-million dollar lawsuits against the US exceeds that limit requires a separate appropriations bill.

I understand all that. And I am not arguing that I believe that is questioning the validity of the debt. I am saying that the above will be a history lesson if Obama gets his way.

The one who is screaming that the all the above amounts to questioning the public debt is the President. With the Congressional Dems in the peanut gallery cheering him on.

Now, the President has already conceded he can’t go the 14th Amendment route. As if the language of the 14th Amendment gave any sane person reason to believe he could. And the idea that a President can declare the limit on his ability to borrow y contained in an appropriations bill unconstitutional is just loony.

But I don’t see how the proposal Geithner brought to Congress is any less loony. The administration is proposing that whenever the President exceeds the borrowing limit in any appropriations bill in order to spend it on prior debt then Congress can pass a resolution disapproving of Obama effectively appropriating that money on his own.

And then Obama can simply veto that resolution of disapproval.

President We Can’t Wait is proposing that Congress authorize him not to wait for an appropriations bill; he can simply borrow the money to pay off those multi-million dollar lawsuits that currently (but no longer will under his proposal) require separate Congressional authorization.

He’s proposing reversing he process. If Congress doesn’t like it then they can try to stop him via subsequent legislation. But they won’t be able to.

It’s not merely the power to borrow the President is demanding. It’s the power to spend, arguing in essence that limiting his ability to borrow to cover his spending is questioning the validity of the public debt he personally created.

How is Congress not subordinating itself to the executive? How can this possibly not violate the separation of powers? How can this possibly be constitutional?

I want to fairly characterize the President’s proposal. Because it still has horrific consequences. But it’s a mind-bending thing for me to do as I can’t think like Obama. Nobody who’s ever had to worry about the bottom line can think like Obama.

He isn’t arguing that he can spend willy nilly on any new budget items that Congress hasn’t authorized.

He’s arguing that Congress has already authorized him to borrow whatever money he needs to make up the difference between whatever they rake in in taxes (x) and whatever they spend. They just haven’t realized it yet.

So the “y” part of the equation goes away. Now the equation is x+WTF=congressionally authorized appropriations. Unless they pass a resolution changing their minds. And Obama won’t let them change their minds.

I didn’t see your comment when I wrote #102, but the President is saying that Congress has already authorized the spending he plans on covering by increased borrowing.

They have. That isn’t in dispute. What they haven’t done is authorise the borrowing. And he has no authority to borrow it himself.

I think your mistake is that you seem to think “to appropriate” means to borrow. It doesn’t; it means to allow it to be spent. Again, borrowing and spending are two completely separate things. Congress borrows money (or, nowadays, allows the treasury to borrow in its name), and also appropriates it for spending. If they appropriate nonexistent money, then so be it; the proper response is “I can’t spend that money because it doesn’t exist”, not “Right-oh, I’ll just go and borrow it, shall I?”

Steve57, and what I am saying is that Congress could say that the govt can borrow any amount to cover the difference between appropriations and tax revenues (and all other revenues of course). They explicitly have not to date.

How can that be when no budget has passed the Congress (House and Senate) since 2009?

Budgets are not appropriations.

If he’s relying on CR’s, those all have an expiration date.

Yes, they do, and he’s not proposing (at the moment) to ignore them. But CRs are appropriations, Congress has told him to spend the money, but taxes aren’t bringing in enough and it hasn’t authorised him to borrow. It’s like sending your kid shopping with a list, telling him “buy all these things, here’s $50 and you can put another $50 on the credit card”, but the bill is over $100. What should he do?

The correct answer is not to put more on the credit card than he’s been authorised to do, but to put some of the items back on the shelf. “Sorry, dad, I couldn’t get the ice cream because there wasn’t enough money, and I figured it was the least necessary item on the list.”

Milhouse – I disagree. The proper response is I can’t spend it until the money exists or is found, through borrowing, taxation or otherwise. The appropriation sits on the shelf.

Well, yes, if and when the money turns up, it can and should be spent as Congress directed. But if it doesn’t, then it can’t. That’s different from reading into the appropriation an implicit authority to borrow whatever is needed.

I’m not confused about the difference between borrowing and spending. I merely meant to say that at the moment the revenues collected via taxation and borrowing theoretically equal the money authorized to be be spent via appropriations bills.

Of course in real life they don’t. The President is arguing any gap between what he was authorized to borrow and what he actually needs to borrow to cover what Congress (present and past) authorized to be spent he already is authorized to be borrowed. By placing an artificial limit on “y” Congress is derelict in its duties, and needs to authorize he President to make them live up to their obligations.

Where I part ways from you guys is the certainty that future battles, if Congress is stupid enough to give in on this, won’t be over the debt ceiling. It will be over disagreements about what Congress has appropriated.

What would stop any future President from simply vetoing bills that attempt to defund the beast and simply borrowing money to fund agencies and programs to the level that a prior appropriations bill by a prior Congress funded to his liking. Other than economic reality, but anyone who argues we need to take on ever more massive debt to pay our already massive debt doesn’t operate on that plane.

This isn’t pure conjecture on my part; Obamacare contains certain Easter Eggs like IPAB which the way the law is written are binding on future Congresses. There will be a brief window in 2017 to repeal IPAB, but to do so requires a 3/5 majority in the House, the same majority in the Senate, plus the President’s signature.

IPAB has the authority to tax, spend, and place conditions on grants to the states. The HHS Secretary is required to implement those IPAB rulings.

Congress does have the initial ability to rein IPAB in, but only with a 3/5 majority in the Senate and the President’s signature. If IPAB doesn’t go away in 2017 then Congress’ ability to restrain IPAB goes away in 2020. They’re completely off he leash then.

Since the only part of Obamacare that was struck down was the part about using Medicaid money to extort states to expand their Medicaid programs, the (unconstitutional in my view) provisions about IPAB remain.

Thanks, Chief Justice Roberts!

I mean, the whole thing is a mess. And the issue is in my view political, not a matter of law. Would the SCOTUS even want to step in if Congress authorizes the President to borrow whatever he needs to to meet a budget shortfall (and isn’t comical to use the term “budget shortfall” these days) and the President demagogues the issue as a case where Congress won’t send him responsible appropriations bills he can sign.

And I still don’t see how a President could be given the authority to veto any Congressional attempt to limit his borrowing, given that the Constitution gives Congress the power to borrow.

108. The correct answer is not to put more on the credit card than he’s been authorised to do, but to put some of the items back on the shelf. “Sorry, dad, I couldn’t get the ice cream because there wasn’t enough money, and I figured it was the least necessary item on the list.”

Comment by Milhouse (15b6fd) — 12/7/2012 @ 11:45 am

What’s the correct answer if you authorize the kid to go over the limit unless you, mom, and five of his friends can’t gather a veto-proof majority to make him go back for a refund?

The President is arguing any gap between what he was authorized to borrow and what he actually needs to borrow to cover what Congress (present and past) authorized to be spent he already is authorized to be borrowed. By placing an artificial limit on “y” Congress is derelict in its duties, and needs to authorize he President to make them live up to their obligations.

Those two statements contradict each other. The second one is correct. Congress is derelict in its duties if it fails to (let him) borrow for what it has told him to spend. But that doesn’t change the fact that it hasn’t authorised the borrowing.

It will be over disagreements about what Congress has appropriated.

The bill says how much is being appropriated.

What would stop any future President from simply vetoing bills that attempt to defund the beast and simply borrowing money to fund agencies and programs to the level that a prior appropriations bill by a prior Congress funded to his liking.

Because the previous bill has run out. The money it appropriated has been spent.

Obamacare contains certain Easter Eggs like IPAB which the way the law is written are binding on future Congresses.

Which is impossible. Congress hasn’t got the power to bind its successors.

Since the only part of Obamacare that was struck down was the part about using Medicaid money to extort states to expand their Medicaid programs, the (unconstitutional in my view) provisions about IPAB remain. Thanks, Chief Justice Roberts!

The court has had no opportunity yet to rule on IPAB. Roberts hasn’t said anything about it, and he can’t say anything about it until it comes before him, or he’ll have to recuse himself when it does.

And I still don’t see how a President could be given the authority to veto any Congressional attempt to limit his borrowing, given that the Constitution gives Congress the power to borrow.

Think of it this way. Suppose Congress doesn’t authorise “as needed” borrowing, but instead authorises $10T. You’ll agree that that’s perfectly constitutional. Now suppose only $1T has been borrowed and Congress changes its mind and votes to restrict the authority to $5T. Do you deny that the president could veto that? Of course he could. So how is it different if the amount is left to the president’s discretion?

Milhouse – I think more accurately this should start out with the real chain of events.

Appropriations are not spending – Since the government receives its revenues unevenly over the course of the year Congress makes appropriations from nonexistent cash on a regular basis. Anticipated tax revenues may or may not materialize, short-term public borrowing may be utilized to plug temporary cash flow shortfalls or longer-term borrowings for longer-term needs, and raiding the social security trust fund has been a regular source of cash needs.

Well, clearly I was wrong and the President can’t just veto appropriations bills and borrow money to fund programs to levels provided by expired appropriations bills (yet) and frankly that’s a relief.

But, Milhouse, can anyone still talk about Obamacare bending the cost curve down with a straight face?

Will the cost overruns on that Congressionally authorized program be a valid public debt that can’t be questioned?

What do you imagine Obama’s answer would be?

Because as I understand the President’s argument, and I clearly haven’t been precise enough in my language, is that when Congress refuses to authorize the executive to borrow enough to pay off valid public debt and when it refuses to appropriate the money to pay valid public debt it created by the legislation it passes it is questioning the validity of the public debt.

I’ve never heard Geithner or Obama say word one about appropriations bills or budget shortfalls.

I think it just clouds the issue if the focus is on me and whether or not I understand the difference between borrowing and spending. I’m certain I do or else I couldn’t run two businesses.

The issue is when I hear Geithner and Obama talk about Obama’s debt ceiling demand they’re talking about both. They’re talking about the public debt which, as they put it, Congress created. And how Congress irresponsibly refuses to meet its obligation to pay the debts that it owes.

As far as I can tell they are talking about whatever debt the legislative branch has created from the beginning of the Republic to date. Not merely the shortfall in one particular period generated by a failure to authorize the executive to borrow enough to cover the gap between tax revenue and the spending authorized in one particular appropriations bill.

He isn’t talking about raising the debt limit to cover the budget deficit. He’s demanding the ability unilaterally control the debt limit to cover whatever amount of the national debt falls due at any particular time.

Whether this particular Congress appropriated the funds for that purpose or not. Because either this Congress or a prior Congress did create that debt through legislation. And they may not have appropriated the funds to cover the costs either, but now this Congress can’t refuse to let him borrow the funds to cover that debt and risk defaulting on it.

105. Steve57, and what I am saying is that Congress could say that the govt can borrow any amount to cover the difference between appropriations and tax revenues (and all other revenues of course). They explicitly have not to date.

Comment by SPQR (e089f4) — 12/7/2012 @ 11:28 am

I understand that. But if I understand the President the amount Congress appropriated still represents a ceiling on the amount he can borrow and he wants to eliminate that as well.

President Obama offered Republicans a detailed plan Thursday for averting the year-end “fiscal cliff” that calls for $1.6 trillion in new taxes, $50 billion in fresh spending on the economy and an effective end to congressional control over the size of the national debt.

…Although the White House offer seemed to startle Republicans, it contains little that would be unfamiliar to anyone following the president’s recent public statements. The exception was his proposal on the federal debt limit. GOP aides said Obama is seeking to permanently enact procedures that were temporarily adopted in the summer of 2011 that allow the White House to unilaterally increase the debt ceiling unless two-thirds of lawmakers disapprove.

…However, this change would also deprive Congress of its historic authority over federal borrowing.

If the spending authorized by any pariticular appropriations bill represented how much debt he could add, that would still allow Congress to maintain control over federal borrowing, no?

But I have never read or heard anything in the reporting that would indicate that. It’s all exactly as above. He’s demanding to end Congressional control over the size of the debt and hand the reins to him.

I’ve certainly never heard anything in Obama’s comments that he intends to limit his hikes in borrowing to just make up for a gap between tax revenue and expenditures authorized by an appropriations bill.

Have you?

Instead my understanding of what he’s trying to do in the aggregate is use whatever he can intimidate Congress to give him in the way of higher taxes on new programs, then finance all the old debt with new debt.

“I’ve certainly never heard anything in Obama’s comments that he intends to limit his hikes in borrowing to just make up for a gap between tax revenue and expenditures authorized by an appropriations bill.”

Steve57, it does not make sense. Obama can’t spend money over and above that which is appropriated.

This is why Milhouse and I are baffled by your comments. What do you think Obama can do with money he borrows that is not for an appropriated budget or supplemental appropriations bill? They can’t put it under a mattress.

Since the only part of Obamacare that was struck down was the part about using Medicaid money to extort states to expand their Medicaid programs, the (unconstitutional in my view) provisions about IPAB remain.

AFAIK, this was not at issue in any of the cases that the Court addressed.

This Obama person should be King for life and given a license to do whatever he sees fit. He could issue himself that official license as part of an Executive Order.

Rather than be known merely as a “community organizer,” he could be known as “the nation organizer.”

Keep in mind, when he was a member of the Illinois State Legislature, he voted “Present” about 150 times. He needn’t take a “yea” or “nay” position on any of those 150 issues—his “presence” was all that was needed. And the reason he refuses to disclose his college records or health records is because he is so modest and humble, that he doesn’t want the rest of us to suffer from poor self-esteem when we compare our own academic records and cholesterol levels to those of The One.

I think the scary part is trying to imagine what he could do that would be so outrageous as to make Congress impeach him. I’m not sure. I bet even an executive order to disband the Supreme Court might fly.

Laws are only so good as the willingness of those responsible to enforce them.

Friend, no matter how well any of us performed in college, it probably does not compare to Obama’s records. After all, he evidentally did so well at Occidental, that the school asked him to transfer to Columbia so as not to make the other Oxy students feel so inferior. And Oxy is a competitive school to get into.
And once he was allegedly at Columbia, he apparently was such a meek and humble scholar that no fellow student in the poli sci department recalls having any classes with him. In other words, despite not physically attending the classes, he was still able to pull such outstanding grades so as to gain admission to Harvard Law.
How can anyone question that he is indeed, The One ?

And how could you even think that your cholesterol level, or your pulse rate, or your white blood cell count could compare to the invincible health of Obama ?

His book, Dreams From my Father, published in 1995, includes language, metaphors, literary techniques, and very specific anecdotes which are strinkingly similar to what Bill Ayers would later write in his 2001 memoir Fugitive Days.

With all of this indisputable evidence of his greatness, how could anyone dispute his divine right to be our King ?

124. Steve57, it does not make sense. Obama can’t spend money over and above that which is appropriated.

This is why Milhouse and I are baffled by your comments. What do you think Obama can do with money he borrows that is not for an appropriated budget or supplemental appropriations bill? They can’t put it under a mattress.

Comment by SPQR (768505) — 12/7/2012 @ 3:58 pm

It isn’t what I think he can do with the money. It’s what he thinks he can do with the money.

And what I understand him to be saying is this; he’s demanding authority over the debt limit so he can borrow as much money as he needs to pay whatever amount of debt comes due at a particular time. His demand to borrow as much as he claims he needs is tied to the size of the debt, and if he gets control over the debt limit then Congress can’t limit his ability to pay off debt as he deems necessary.

So appropriations bills be damned, or any other limit on his authority.

As I understand his position unless, after he declares his intention to raise the debt limit for the noble purpose of paying the debts the legislature irresponsibly accrued, Congress can pass a resolution of disapproval by a veto proof majority he has unlimited authority to borrow from Peter to pay Paul.

Congress’ failure to stop him is what makes his borrowing and spending legal, not what they originally appropriated.

That’s what I understand to be his position. This is why I said that I find what Obama is proposing not really any less loony than the demand from other Democrats that Obama should just declare the debt limit unconstitutional.

I believe Obama is saying exactly that. As long as Obama ties his mounting spending to the mounting debt, which he’ll never let anyone forget Congress created via legislation and is therefore valid and can’t be question, then he can borrow whatever he needs to pay off that debt.

This is what liberals mistake for the “adult in the room.”

He’s making a political case, not a legal one. He’s basically daring Congress to enforce its spending limits.

“As long as Obama ties his mounting spending to the mounting debt, which he’ll never let anyone forget Congress created via legislation and is therefore valid and can’t be question, then he can borrow whatever he needs to pay off that debt.”

Steve57 – Obama’s mounting spending in excess of revenues is what causes debt to increase and requires him to go hat in hand to Congress and request increases in the debt ceiling to maintain his course of deficit spending. The act of paying off existing or maturing debt does not increase overall debt outstanding, except perhaps on a very, very short-term basis due to timing issues, because it essentially replaces old debt with the same amount of new debt. The interest cost of the new debt may be higher or lower than the old debt which is repaid and of course overall interest costs tend to rise as the debt level rises.

It’s deficit spending that’s driving government borrowing higher and the need for a higher debt ceiling, not refinancing requirements. Obama wants to take debt ceiling increase authority away from Congress so he doesn’t have to have battles like the summer of 2011 or what is going on today.

Steve57 – You may be thinking of a practice states and municipalities have engaged in periodically of prefunding the retirement of their debt obligations, often called defeasement, which can occur many years in advance of the actual maturity of the obligation. In those transactions the state or municipality typically issues new bonds and uses the proceeds to purchase U.S. Treasury securities which are placed into a trust dedicated to retiring and outstanding debt obligation.

I don’t recall the U.S. Treasury engaging in this type of transaction in the past several decades, but I certainly could have missed something.

Did Congress appropriate the money to pay the welfare obligations incurred when Obama, by executive order, allowed states waive the work requirement? Do they just say, “what the damage?” and appropriate it after the fact? Do they pass appropriations bills with “whatever” in the amount column?

Yes, I know that the unemployment insurance extensions pass the Congress, but are they really rolling over on all this other stuff?

In any event, it seems like the appropriation/no budget/continuing resolution mess is bad enough, but the last vestige of the old republic will be gone if they hand over the debting power, too.

I’m not thinking of anything. It’s not my scheme. It’s Obama’s scheme, and I’m just trying to figure out his game.

Instead of criticizing me and the unconstitutionality of my plans, which I don’t have any by the way, it might be helpful to try and figure out what Obama’s up to and the unconstitutionality of his plans.

I see in in microcosm how this guy gets away with it. I could have a totally warped understanding of what he’s demanding and to what end, but what’s up with the circular firing squad forming up over my understanding of the difference between borrowing and spending or the appropriations process?

I’m somewhat frustrated by the general reaction; I must be wrong because of the Constitution. I’m wrong because I don’t understand the appropriations process.

After all these years do you guys not know what Obama is about? I’m certain of a few things about him. He understands the Constitution and the appropriations process. And he loathes them. When he sided with Zelaya in his first foreign policy venture it was because of his disdain for constitutional limits on presidential power.

I’m willing to accept I’m wrong. But it’s got to be because I don’t grasp what Obama is up to.

If somebody has a better grasp of what Obama is up to I wish they’d crawl out and say something. What does Obama think he can get away with if he gets control of the debt limit?

I feel like a French colonel being dismissed by the generals who came up with the Maginot line because of course the Germans can’t invade.

“There is no, ‘Trust us, changes are coming’ clause in the Constitution,” Cogan wrote in his ruling against DOJ. “To the contrary, the Bill of Rights itself, and the First Amendment in particular, reflect a degree of skepticism towards governmental self-restraint and self-correction.”

Justice Brian Cogan and I are on the same page. Obama’s solutions to the problems he seeks to exploit are exactly what the Constitution guards against.

So forget the Constitution exists. Because Obama has. What game is he up to? I could have it totally wrong, but not because I haven’t factored in Obama’s deep regard for constitutional checks on his power.

“And what I understand him to be saying is this; he’s demanding authority over the debt limit so he can borrow as much money as he needs to pay whatever amount of debt comes due at a particular time. His demand to borrow as much as he claims he needs is tied to the size of the debt, and if he gets control over the debt limit then Congress can’t limit his ability to pay off debt as he deems necessary”

The debt limit does not hinder refinancing debt that comes due. As treasury securities mature, and are paid off, they come off the debt and the new securities that paid off the old ones go back on the debt. No increase in the debt limit ensues.

145. The debt limit does not hinder refinancing debt that comes due. As treasury securities mature, and are paid off, they come off the debt and the new securities that paid off the old ones go back on the debt. No increase in the debt limit ensues.

Comment by SPQR (768505) — 12/8/2012 @ 6:23 pm

Then what is Obama up to?

He clearly has plans to pile on debt. He’s said so. The whole idea behind having control over the debt limit is that Congress no longer controls the size of the debt.

How will unilateral control over the debt ceiling enable Obama to increase the debt?

“How will unilateral control over the debt ceiling enable Obama to increase the debt?”

Steve57 – If he can continue spending the way he has, Obama will no longer be obligated to go back to Congress to seek increases in the debt ceiling to sell new bonds to finance his deficit spending if he has future authority over it.

“daley, that’s what I thought. That’s the thought I thought I was expressing.”

Steve57 – I think what was confusing people was you throwing in the idea of refinancing existing debt, which really has no impact.

If Obama keeps incurring deficits, he will need to keep borrowing to finance them, which will mean growth in the amount of federal debt outstanding, which will require increases in the debt ceiling. In 2011, Republicans wanted to have another debt ceiling discussion prior to the election, but Obama managed to push it beyond with the size increase he obtained.

I’m certain I did confuse people. What I was trying to say is that stuff we’re not spending on now will become existing debt in the not so distant future.

Demagogue Congress to sign on to spending. Hopefully using ridiculous numbers like those used to pass Obamacare so the propagandists in the MFM can claim all this new spending is bending the cost curve down. Then once the program exists President Alinsky points to the 14th Amendment which states “The validity of the public debt of the United States, authorized by law, …shall not be questioned” and employs the Cloward-Piven plan of making us live by our own rules. So to speak.

“How will unilateral control over the debt ceiling enable Obama to increase the debt?

Comment by Steve57 (d941b2) — 12/9/2012 @ 9:42 am ”

It doesn’t. The reason that Obama is trying to get the debt ceiling removed is simply to make the budget process require one less step in Congress. Because its an explicit opportunity to point out how high the deficits are that he’s running. When one tries to demagogue spending, the Democrats can trot out dead disabled poverty stricken dogfood eating seniors. But on the debt ceiling, its just about debt and the Democrats look like the overspenders they are.

157. “How will unilateral control over the debt ceiling enable Obama to increase the debt?

Comment by Steve57 (d941b2) — 12/9/2012 @ 9:42 am

”
It doesn’t. The reason that Obama is trying to get the debt ceiling removed is simply to make the budget process require one less step in Congress. Because its an explicit opportunity to point out how high the deficits are that he’s running. When one tries to demagogue spending, the Democrats can trot out dead disabled poverty stricken dogfood eating seniors. But on the debt ceiling, its just about debt and the Democrats look like the overspenders they are.

Comment by SPQR (768505) — 12/9/2012 @ 11:03 am

Well then, that’s how it helps doesn’t it.

If it just conceals the fact that Democrats are spending us into oblivion it helps boil the frog.

As an aside, from where I sit the only problem the Democrats have with the fiscal cliff is that it’s not high enough.

At the outbreak of World War II, de Gaulle was still a colonel, having antagonised the leaders of the military through the 1920s and 1930s with his bold views.

I’m not sure de Gaulle argued the Maginot would not hold, just that it was not a good idea – war would be mobile.

Now here – Obama does not want the Republicans to hold over him must-pass legislation.

He could of course propose the debt limit raised by another 10 trillion dollars but that doesn’t look so good politically, so he came up with this idea of raising it periodically using a system where the possibility of not doing it still remained, but was much harder. This system however is unconstitutional.

Now besides the debt limit we have appropriations, so he wants a big budget plan for the next couple of years too. He wants also certain “infrastructure” spending and is willing ti cut entitlements to get it, but doesn’t think he could sell any kind of entitlement cut or tax increase on those making below $200,000/250,000 unless he raises marginal tax rates on the highest brackets. Nothing else counts – only marginal rates. He’s thinking about low information voters.

1) The fiscal cliff, Dec. 31. Bush tax law changes, and special tax breaks of the lat two years expire and automatic pending cuts kick in and also unemployment insurance extension ends . Advantage: Obama since he gets some of what he wants automatically and what he doesn’twant the Republicans mostly also don’t want.

2) The debt ceiling is reached, late Jan early Feb 2013. Advantage Republicans unless it gets folded into fiscal cliff talks. There;’s on;y one fiscal cliff. So Obama wamnts to get rid of the problem.

An earlier idea, that maybe the president can borrow based on the 14th amendment, Obama has disavowed. He disavowed it already in 2011. It’s obviously not correct and toying with it would just make mattes harder for him.

It makes my head hurt trying to puzzle out how the mechanics of all this are going to work.

It’s easy.. He leaves a glimmer of a possibility that a debt limit increase might not pass, in the hopes Congress would enact it. He makes the debt limit increase gradual too, as needed, and not all at once for up to, say, a dozen years. (I think he would quickly settle for a worst case scenario for the rest of his presidency)

The step by step increases are so he can argue he is not intending yet for the national debt to go above whatever temporary limit he sets, and the involvement of Congress means he can argue that Congress would still retain bargaining power – in the final analysis if they really, really, wanted to, they could prevent a debt limit increase by a 2/3 vote.

Of course you can’t really do any of this without amending the constitution – this is the line item veto all over again.

Enter the platinum coins. Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

In theory, this is much like having the central bank print money.

This is sheer idiocy. You might as well just print money. Stamping two coins with an intrinsic total value of $3200 bucks or however much platinum the ObaMessiah can fit into the pockets of his fabulously well-creased pants with “$1 Trillon” doesn’t change the fact the money is still based on nothing. All the platinum in the world (130 tons) wouldn’t amount to 1% of the value of one of those coins. No investor is going to be fooled by this.

Fun fact; the entire world’s supply of platinum would support the Obama’s in the style they’ve become accustomed for just under 5 years. Think about it; there isn’t enough platinum in the world to support the Obama lifestyle for two presidential terms. We are so royally screwed.

The guy who authored this garbage apparently visited the WH the other day with all the other Democratic MFM operatives like Sharpton, so this may be someone else’s idea. Perhaps it was raised by someone in the WH. Perhaps King Putt himself. This is the kind of thing I’d expect from him, not that I’d expect him to come up with the idea himself. Probably Jarrett.

The article is completely bonkers, but it’s interesting in one regard. It acknowledges Obama’s all about the spending.

I still think the brainiacs in the MFM would get all tingly if the Da Won spent way above whatever spending was authorized by any appropriations bill. These were the same geniuses who, back when Bush was President, insisted Congress exercise its oversight over the executive branch. They apparently never heard of the concept of three separate co-equal branches of government.

Now that the situation’s reversed and there’s a Democrat in the WH and the Republicans hold the House the same geniuses think it’s rank partisanship for the House to attempt to hold executive branch departments that are creations of Congress (and could be defunded at will) in any way accountable.

I doubt the idea that the House has to originate and Congress has to authorize Obama’s spending would ever cross their minds. If it was pointed out to them they’d probably declare that part “obscure” much like Obama thinks parts of the Bible are. And racist; that part of Constitution is definitely racist.

I still suspect that Obama would spend illegally and then accuse the Republicans in the House of causing the Constitutional crisis by not appropriating the money in the first place. And given the current crew they’d fold.

But I’m willing to accept the idea that the only reason Obama wants the debt ceiling off the table (and in his pocket along with the imaginary $2 trillion) is to hide the true size of the debt from the people.

That seems to be his strategy with the fiscal cliff. The emerging consensus is that Obama would be blamed for the ensuing recession if we go over the edge, even if the GOP took the blame initially.

Since Turbo Tax Timmy is in charge of the withholding tables, they are thinking of tweaking those tables so that people’s withholdings don’t go up. So then they won’t notice their taxes went up until April and all of a sudden they get bit in the arse with a huge bill. The plan being is the GOP will bail Obama out by cutting taxes again.

Peter Schiff: Many Other Cliffs Await the US Economy – CNBC 12/05/2012

Peter Schiff, CEO, Euro Pacific Capital says the U.S. economy may need to go over this fiscal cliff and address some structural issues, or face other cliffs on multiple fronts if this imminent one is avoided.

Peter Schiff is one sharp guy; he agrees with me. The only problem with this fiscal cliff as for as the Democrats are concerned is that it isn’t tall enough for them. If we avoid it, as Schiff astutely observes, then all that means is we go over a higher cliff later. And not too much later.

The dollar could go and likely will go over a cliff as we keep printing more and more.

And investors will simply stop investing in US debt. As Schiff points out, we’ve advertised the fact that no one loans us money. They give us money. And we keep paying off earlier investors with the money that later investors give us. It’s a Ponzi scheme. And ponzi schemes don’t work when you brag to the mark that you’re running a Ponzi scheme. See the trillion dollar coin nonsense above. It’s just a gimmick designed to fool investors. But it won’t fool any investors.

But that’s all this administration has; gimmicks that won’t work.

Fake money and fake economic data is OK, I suppose, if you’re just trying to fool enough of the electorate to vote for Benito Mussolini v2.0 one more time. It won’t work to fool people with skin in the game, or attract people who otherwise might be willing to risk their skins. Not when you tell them up front it’s a sucker bet.

Listening to the vacuum vacated by Laura, Jed Babbins, former H.W. Undersecretary of Defense in charge of shiny things, said repeatedly, its time for the moderates in the GOP to get serious about saving America and the so-cons need to “Shut up”.

So-con issues are dead for the remainder of our life times so lets focus on what’s really important. Like bending the curve of Federal spending B4 it bankrupts us.

Not real sure what his plan is, “Shut up” is the last word from Jed Babbin I ever heard.

The platinum coin idea was circulated at the time of the debt ceiling fight in August, 2011.

It is like printing money, or crediting a bank account, but the difference is, it is not done by the Federal Reserve Board but by the U.S. Treasury, which is under the direction of the President of the United States.

The money from the extra value assigned to the coin is called seigniorage, although there seems to be some other definitions too..

The US Treasury made an estimated $6.3 billion from the state quarters because people collected them. I don’t know if that’s right. It anyway cost only 5 cents or soo to make each quarter. (pennies, on the other hand, cost about 2 cents each now, even though they are mostly made of zinc)

It also makes about $6 to $7 billion a year from notes circulating outside the United States.

The American $100 bill has some competition, primarily from the €500 note. The larger value of the banknote makes it easier to transport larger amounts of money. As an example, to carry $1 million in currency on board an airplane, and it is in $100 bills, the weight of the money is 22 pounds. It is difficult to carry this much without a briefcase and some physical security. Since it is against authority of Title 26 of the United States Code (U.S.Tax Code) regulations to carry more than $10,000 without reporting it (31 USC 5311), it is unlikely to pass security unnoticed. The same amount in €500 notes would weigh less than three pounds, and it could probably be dispersed in clothing and in luggage without attracting attention or alerting a security device.

For many illegal operations the problem of transporting currency is more difficult than transporting cocaine because of the size and weight of the currency. The ease of transporting banknotes makes the euro very attractive to Latin American drug cartels.[15]

The Swiss 1000 franc note is probably the only other banknote that is in circulation outside of its home country. It is worth slightly more than US$1000. However, to the non-Swiss it doesn’t provide a significant advantage over the €500 note as there are 20 times as many of the €500 note circulating and they are more widely recognized. As a reserve currency it is roughly 0.1% of the currency composition of official foreign exchange reserves.

Governments differ radically in their issuance of large banknotes. As of August 2009, the number of 1000 franc Swiss banknotes circulating is over 3 times the population of Switzerland. In comparison the number of £50 banknotes circulating slightly less than 3 times the population of UK. But the 1000 franc banknote is worth roughly £600. The British government has traditionally been wary of large banknotes since the counterfeiting Operation Bernhard in World War II which caused the Bank of England to withdraw all notes larger than £5 from circulation, and not reintroduce other denominations until the early 1960s (£10), 1970 (£20) and March 20, 1981 (£50).

The American treasury considered re-issuing a US$500 banknote when the euro banknotes began circulating. There was concern that the high value banknotes would provide competition.

However, after recognition that the $500 banknote would provide a huge advantage to worldwide criminal operations and dictatorships, the decision was made not to pursue this option.[citation needed]

The House voted 254-173, with 57 Democrats joining Republicans in favoring the bill, which allows the president to propose elimination of individual items in spending legislation and subject them to a separate, second vote by Congress….

A Republican-controlled Congress in 1996 gave Democratic President Bill Clinton a full line-item veto authority that required a two-thirds majority to override and reinsert spending measures.

But the Supreme Court ruled it unconstitutional in 1998, saying it took spending powers away from Congress.

The bill passed on Wednesday tries to get around the constitutional problem by subjecting vetoed items to a second vote in Congress.

The US Treasury made an estimated $6.3 billion from the state quarters because people collected them.

Yes, and for a while people were buying up Twinkies and trying to sell them on E-Bay and Craigslist for hundreds of dollars per box, too.

Seigniorage can be considered a “tax;” the difference between the cost of producing the coin and its value to a collector.

But investors aren’t collectors.

This kind of thing won’t fool any investor. While you might be able to sell those coins to a collector for something well above the intrinsic value of the platinum, placing them on deposit and pretending they’re worth $1 trillion each so you can sell debt against that pretend collateral doesn’t make it so.

This would put the US in exactly the same position as Japanese companies who were borrowing against the vastly inflated value of their real estate holdings. Before their bubble burst it was said you could fold a 10,000 yen note (roughly $100-$125 depending on the exchange rate) into the tiniest square you could manage, then drop it on the ground anywhere in the Ginza. It wouldn’t pay for the ground it was covering.

Except no one in their right mind would pay that. And no one in their wrong mind had the money. But the friendly lenders in the banking part of the zaibatsu were willing to say this real estate was worth that money so they could keep lending to their buddies. The market begged to differ, and the bubble burst when reality hit.

Putting a couple of $1600 dollar or so coins on deposit with “$1 Trillion” stamped on them is no different than claiming the WH and its grounds are worth $10 Trillion and putting that on the balance sheet so you can borrow against it.

Of course you can’t really do any of this without amending the constitution – this is the line item veto all over again.

Nonsense. It’s nothing like the line item veto. There’s no reason Congress had to put a limit on its borrowing authorisations in the first place.

The problem with the line item veto is that it violated the Presentment clause; there is nothing at all preventing Congress from including a line item veto clause in each appropriation bill, if it wanted to, and that would be perfectly constitutional.

This is sheer idiocy. You might as well just print money. Stamping two coins with an intrinsic total value of $3200 bucks or however much platinum the ObaMessiah can fit into the pockets of his fabulously well-creased pants with “$1 Trillon” doesn’t change the fact the money is still based on nothing.

Um, what do you think money is? All money is “based on nothing”. Do you imagine that a $1 coin contains metal worth $1, or that the paper in a $100 note is worth $100?! Why would a platinum coin be any different? The only point of making these coins out of platinum rather than aluminum or plastic is that the treasury isn’t authorized to mint aluminum or plastic coins, or to print paper money, but it is authorized to mint platinum ones, in any quantity and denomination that it likes. As the article says, the economic effect would be exactly the same as having the Fed print the money.

All the platinum in the world (130 tons) wouldn’t amount to 1% of the value of one of those coins. No investor is going to be fooled by this.

What have investors got to do with anything? And why would they need to be fooled? Did you imagine the proposal was to sell these coins?!

178. What have investors got to do with anything? And why would they need to be fooled? Did you imagine the proposal was to sell these coins?!

Comment by Milhouse (15b6fd) — 12/11/2012 @ 7:08 am

Of course they’re not going to sell the coins; no one would buy them. Despite what you claim, they are not worth $1 trillion. But the idea is to use the fictional value of the coins to make an end run around the debt limit and finance the operations of the government by selling US Treasury securities.

Collectors don’t buy securities; investors do.

That’s what they have to do with this, Milhouse.

And increasingly they’re not playing along. This is why the Fed has to buy billions in treasuries every month. The government needs to sell a vast quantity of Treasuries to finance the government, and the market is willing to buy only so much. So the Fed buys billions every month to make up the difference (they’re expected to announce following tomorrow’s FOMC the open-ended unsterilized purchase of $45 billion in long-term bonds per month).

Investors don’t have the risk appetite for the long-term securities. Gimmicks such as the above would only have a further negative impact.

The fraudulent claims of Obama and his crooked Treasury secretary are amazingly brazen. The country’s budget is approach collapse and Obama is not only refusing to identify spending cuts but demanding spending increases. We saw more rational behavior from Juan Peron.

The money is real, not Monopoly™ whether it’s inflationary depends on what the money supply is doing. Patterico recently linked to an opinion that the real money supply has dramatically shrunk, and the problem with QE is that it’s not enough to stave off the coming deflationary crisis. I have no idea whether this is true, but it’s certainly possible.

McConnell fillibustered his own proposal. Now ain’t that a hoot!
————————–

Comment by Milhouse (15b6fd) — 12/11/2012 @ 9:10 am

Um, what are you talking about?

I’ve been meaning to write about it because it really belongs in this thread. But the way Senator Schumer Schumer talked about it Sunday on Fox News Sunday, it looks like talking about this is Democratic Party spin.

Senator McConnell put on the floor a resolution that said, it was his idea, not ours, that let the president raise the debt ceiling. After all, it’s money Congress has already spent, and, let Congress, by 2/3, override it. He thought we Democrats would run away from that, scared as could be.

Within a half-hour, we had 51 votes. We called his bluff and he ended up filibustering his own proposal. The normally, very politically surefooted Mitch McConnell stumbled on this because the ground changed here.

Here’s how it happened: In the morning, Mr. McConnell went to Harry Reid, the Senate Majority Leader, and asked him to take a vote on a bill that would allow the president to raise the debt ceiling. That’s the artificial limit imposed by Congress on how much money the government may borrow to make good on past debt. (Please note here: “imposed by Congress” and “past debt.”)

Mr. McConnell’s clever plan was that the Democrats would not be able to muster a regular majority to pass the bill, thus proving to the world (or at least the 18 people who still have the patience to pay attention to Congress) that the Democrats don’t really want to end the pointless fight over the debt ceiling Mr. McConnell cooked up in 2011.

But Mr. Reid consulted with his caucus and found support for the bill, so he went to the floor, offered it and scheduled 20 minutes of debate before an up or down vote.

And that’s when Mr. McConnell may have made Senate history. He rose in objection to his own bill. “Matters of this level of controversy always require 60 votes,” he said. Using the Senate’s phony politesse, he added that he wanted “my friend, the majority leader, to make it 60 votes.”

Mr. Reid said no. “The republican leader objects to his own idea,” he said. “We have a filibuster of his own bill.”

Senator Dick Durbin, the Illinois Democrat who is the Majority Whip, was incredulous. “This may be a moment in Senate history, when a Senator made a proposal and when giving an opportunity for a vote on that proposal, filibustered his own proposal,” he said.

In a classic understatement, he added: “It really calls into question whether or not this was the kind of offer that would be considered to be good faith.”

Mr. Durbin said he would ask the Senate parliamentarian to look into whether or not a Senator had ever objected to his own bill before.

Actually “limit imposed by Congress” is legally wrong. It’s actually the upper limit of the authorization to borrow.

And borrowing is not needed to the debt, or doesn’t have to be, because instead payments (it’s not really checks anymore for the most part) could simply be stopped or not issued.

Of course if you wait till the last day, you may not be able to pay back the debt due that day on that day. But there are ways around it. Banks could be encouraged to loan the money interest free against the upcoming debt payments due. Even other payments.

I don’t think the claim is that it was dishonest, just embarrassing. If the report is correct, it was a tactic that rebounded. He offered the proposal, not in good faith but to embarrass the opposition, which is perfectly legitimate, but only a good idea if you’re confident that they won’t call your bluff. Of course had the Senate passed it, it would only be because they were confident the House would reject it.

It hardly makes McConnell look dishonest as Tillman claims, nor the fatuous piece links claims. It is just as legitimate as reversing one’s vote to permit a motion to reconsider.

Right. And it is very possible that Harry Reid only got 51 Senators because he gave them assurances this would not become law without another vote in the Senate, possibly arguing there no matching House bill would pass or something like that.. McConnell, however, couldn’t take the risk.

Basically McConnell was trying to embarass the Democrats and prove that they didn’t really want and wouldn’t vote for Obama’s proposal to let him
raise the debt ceiling without a prior vote in Congress. Harry Reid turned the tables on him by lining up the votes, so now they are all chortling about this.

What do you mean? They would be US currency, exactly like any other. How could they be worth anything but their face value?

But the idea is to use the fictional value of the coins

What fictional value? What would be fictional about it? You seem to have no idea what money is.

to make an end run around the debt limit and finance the operations of the government by selling US Treasury securities.

What are you talking about? Why would securities be necessary? The treasury would already have the money, so it wouldn’t need to borrow anything. It could just spend the money it had created.

Collectors don’t buy securities; investors do.

Of course. Who suggested otherwise? What have collectors got to do with the price of fish?

Comment by Milhouse (15b6fd) — 12/11/2012 @ 9:09 am

Milhouse, it’s supply and demand. If collectors collected fish, they’d be the ones to determine the the demand side of the curve. Investors set the the demand side of the curve for investment vehicles. And the demand isn’t there for long-term Treasuries. So the fed has to buy up a huge chunk of the supply in order to create the illusion this borrowing and spending can go on forever.

And that’s the problem with the $1 trillion dollar coin gimmick. You can’t maintain such an illusion when you are openly and publicly creating symbols that demonstrate you are utterly unserious about paying investors back except the same increasingly devalued dollars that they themselves originally loaned you. Your promise to pay is worthless when you are demonstrating you have neither the will nor the intention of ever paying. Just running a Ponzi scheme that will leave a lot of people without chairs when the music stops.

It would be better to mint the coins out of sun-dried cow dung. Either route, as SPQR points out, will get you to the Weimar Republic.

Why do you bring up collectors, Steve57? What have they got to do with it? Did you imagine these $1T coins would be sold?!

And what have securities got to do with it either? The proposal is very simply that the treasury mint these coins, deposit them into its account with the Fed, and then spend them. No debt, no securities, no nothing.

Would this be inflationary? That depends on what the money supply is doing. If it’s static or expanding, then this would significantly expand it and thus be inflationary; but if it’s shrinking then this could be a healthy correction for that. But either way, the money would be every bit as real as all US currency, not fake, as you keep claiming.

Does the Treasury have that power? If so, then yes, it would be better, because cow dung is cheaper than platinum. Why waste money? But what is your point with this? What significance did you attach to platinum that you wouldn’t to cow dung?

That came from Fox News, but the whole quotation is part of a quote from Senator Schumer,not Chris Wallace or anybody else.. I didn’t quote from the beginning, but I thought I madde clear that was a quotattion from Senator Charkles Schumer.

Here’s a little bit more context:

WALLACE: Let me bring in Senator Schumer.

And, this goes beyond simply the question of this deal. Why should Congress give up its constitutional authority over borrowing? You know, we looked at your record, when George W. Bush was president, and you voted at least three times against increasing the debt limit.

Why would Congress unilaterally give up that power?

SCHUMER: Well the bottom line is, I think on debt ceilings, things have shifted. I don’t agree with my good friend, Bob Corker, on the issue. I think it shift the way it has on taxes and we just saw that.

Senator McConnell put on the floor a resolution that said, it was his idea, not ours, that let the president raise the debt ceiling…..

An objection to suspending the rules. There was no debate over this. It did not go to committee. It was proposed, political theatre. And Hairy Reed tried to circumvent the rules with a consent motion to go straight to an up or down vote. There is no evidence that McConnell threatened a filibuster’ or engaged in one. He objected to Reed’s motion. If that counts as a filibuster, it is easy to understand why they try to claim it ps use has been unprecedented, and why the nuclear option is being contemplated. It was stupid enough on it’s own. Claiming it is something it is not adds silliness to silliness.

The problem that led to “legal tender” laws is that people refused to accept the values set by the government on precious metal coins, and went by the market price of the metal. The last time I checked, the copper value of pre-1982 pennies was two and a half cents.

Obama’s proosal was not absolute, and relies on a limited veto by Congress. This isn’t constitutional.

It would be quite easy to constitutionally make it near absolute by proposing to raise the debt to say, $30 trillion, but Obama doesn’t want to do anything like that and it wouldn’t pass Congress anyway.

Back in July 2011, Mitch McvConnell seems to have proposed something like legally (no veto by Congress) would give the presiodent the righht to periodically raise the debt ceiling , but with different terms:

Mr. McConnell’s proposal would give Mr. Obama sweeping power to increase the government’s borrowing authority, in increments, by up to $2.4 trillion — enough, it is estimated, to cover federal obligations through next year — only if Mr. Obama specified spending cuts of equal amounts. But Congress would not have to approve the spending cuts prior to the debt-limit increase.

This is maybe more Constitutional, because it doesn’t go back to Congress.

It just says that if Congress does so and so, he gets authorization to raise the debt ceiling by so much..

Enter the platinum coins. Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

You could miss that it is not allowed to do that with anything else. (maybe there is some authorization to change the composition of some coins, but those are maybe the only coins wiuth anew value it can make)

actually the itention was it should be priced at bullion value, plus maybe a small premium..

But legally, maybe, they could do it.

Comment by Sammy Finkelman (d22d64) — 12/11/2012 @ 10:29 am

Yes. It was called seignorage, the price the sovereign charged above the cost of the minted coin. We call it the “fed rate”, here. The price the government sells money to banks for. It’s the reason the Euro is doomed to failure. Governments must set their own monetary policies.

Sigh. The fed rate is negative right now, it does not meet inflation, but when it did the government gave the bank a dollar looking for $1.03 back per annum. Sigh, again. It’s the most basic of income for a government. Hamilton? He’s on the ten-dollar bill?

I used to think there were real cars, taken from an actual picture on the back of the $10 bill – what used to be the back – but I read that actuallyu those cars are composites by the artist (and not Model Ts)

235.SF: “Laws can only be passed by a majority vote in bth Houses of Congress and signed by the President.” (or a 2/3 vote by both houses of Congress to override a veto)

Comment by Milhouse (15b6fd) — 12/11/2012 @ 10:52 am

Yes, we know that. What has that got to do with it?

I think Obama’s debt ceiling proposal would amount to changing the law. McConnell’s 2011 proposal allowed the president alone to raise the debt ceiling (up to another maximum) but only if certain other things happened (certification by the CBO that some law had been changed so as to cut spending by X number of Dollars?)

What’s unconstitutional about it? The president is authorised to borrow as much as he thinks is needed to cover the appropriations. Are you seriously suggesting that by adding a provision for Congress to disallow a debt issue Congress would be unconstitutionally limiting itself?!

The source is the Institute on Taxation and Economic Policy microsimulation tax model via Citizens for Tax Justice.

If you study this carefully, you will see they believe in a negative Laffer curve. The more you raise taxes, the more you collect.

Three of the possibilities are top tax brackets of 34% and 36% , 35% and 37% and 36% and 38%.

What you have there then are two increments both of 1%.

Now looking at different tables you see that going from the lower one to the second one raises $102 billion but going from the second one to teh third raises $104 billion!

That’s the bottom line where the brackets alone are changed.

And the same thing with all otehr comparisons.

If you change the dividend rate from 20% to the same as ordinary income, then at the lowest bracket you gain $96 billion (901-807) After raising the top two brackets by 1 point you now gain $101 billion and the second point gains $109 billion.

210. Why do you bring up collectors, Steve57? What have they got to do with it? Did you imagine these $1T coins would be sold?!

Of course they won’t be sold. They can’t be sold at the face value. If they were to be sold the difference between the cost to produce them and the sale price would be set by coin collectors.

Those coins could never be sold because it’s just an accounting trick; a bad joke. Which brings us to…

And what have securities got to do with it either? The proposal is very simply that the treasury mint these coins, deposit them into its account with the Fed, and then spend them. No debt, no securities, no nothing.

the fact the joke would be on whoever invested in US treasuries. Thinking they were backed up by the full faith and credit of the US government.

The obvious intent, since this is being floated as a way to get around the debt ceiling, is to give the Treasury a way to retire old debt so it can issue new debt without exceeding its borrowing authority.

This trillion dollar coin lunacy is just another way of monetizing the debt. It’s exactly the same thing as just printing the money. Even the WaPo author who floated the idea (for the administration) admitted as much:

In theory, this is much like having the central bank print money. But, Gagnon said, the U.S. government would simply be using the money to keep spending at existing levels, so it would not create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.

The only difference between minting these coins and printing money is that Obama can do one entirely on his own authority but not the other. That’s it. And despite this guy’s nonchalance the Fed can’t simply unwind its other programs. It’s just not that simple; the fact that the Fed is buying north of $80 billion/mo. in mortgage backed securities and treasuries combined is an admission that’s what it must do to prop up the markets.

Would this be inflationary? That depends on what the money supply is doing. If it’s static or expanding, then this would significantly expand it and thus be inflationary; but if it’s shrinking then this could be a healthy correction for that. But either way, the money would be every bit as real as all US currency, not fake, as you keep claiming.

Comment by Milhouse (15b6fd) — 12/11/2012 @ 10:10 am

They’re talking about just adding $2 trillion dollars to the money supply. Of course it would be inflationary.

It would also result in not only an immediate panic in the markets but another credit downgrade.

And yes, the government of Zimbabwe insisted its money was real, too. But I spent a few days at a bed and breakfast in Harare and they were using one million Zimbabwe dollar notes as bookmarks in their library because it would have cost more to go to a bookstore and buy a bookmark.

They kept insisting their money was real right up until they abolished their own currency when they caught up with the rest of the world and had to admit it was fake.

Why on earth not? They’re worth $1T each, so if someone had $1T to spare and wanted one, why not sell it? But of course nobody but the treasury would have a use for them.

The obvious intent, since this is being floated as a way to get around the debt ceiling, is to give the Treasury a way to retire old debt so it can issue new debt without exceeding its borrowing authority.

Um, no. You’re as bad as Sammy — don’t comment on something without reading it first. The proposal is to get the money that Congress has appropriated by minting it instead of borrowing it.

It’s exactly the same thing as just printing the money.

Yes, of course. Whoever suggested or thought otherwise?

The only difference between minting these coins and printing money is that Obama can do one entirely on his own authority but not the other. That’s it.

Yes. Do you imagine you’ve discovered something? That is what the proposal was all about. What did you think it was about, if not that?

And despite this guy’s nonchalance the Fed can’t simply unwind its other programs. It’s just not that simple; the fact that the Fed is buying north of $80 billion/mo. in mortgage backed securities and treasuries combined is an admission that’s what it must do to prop up the markets.

The Fed is busily expanding the money supply; if these coins expand the money supply too much, then the Fed can simply cut back on its own expansion.

They’re talking about just adding $2 trillion dollars to the money supply. Of course it would be inflationary.

Only if the supply isn’t shrinking. Patterico linked an article just recently which claimed that the real money supply is significantly shrinking, which is why Bernanke is desperately trying to stave off a deflationary crisis by creating money as fast as he can, and that the problem is that he can’t do it fast enough. If that’s true, then this would help.

And yes, the government of Zimbabwe insisted its money was real, too.

Steve, what do you think money is? What is US currency? And in what way would these coins be less real than any other coin or note in your pocket?

When I go to the Seven Eleven for a quart of milk, it’s Eisteinian. The Seven Eleven buys my $1.98 for a quart of milk.

When you say “lent” and I say “sold”, the three percent premium is the price of money issued by the government.

Alexander Hamilton got himself killed trying to establish a central bank. It was the major source of income for the federal government at the time, George Washington’s attempts to collect whiskey taxes not turning out all that well.

Now consider for a moment, traders entrusted with tens of $Billions$ listening to machinations with all the gravity of the current one, carried on by Turbo Tax Tim and Helicopter Ben and their seconds(no disparagement of the actors possible).

What happens when a Municipal or State Bond up for offer, e.g., Kali’s $10 Billion of bonds let for last year’s shortfall, can no longer be counted on as worth 30 cents on the dollar?

Greece just sold 90% of their bonds on offer for same.

The auction is a failure and the price rises dramatically. Japan is the largest holder of US Debt, they have no money to buy more. China isn’t buying any more. Get the drift?

When I go to the Seven Eleven for a quart of milk, it’s Eisteinian. The Seven Eleven buys my $1.98 for a quart of milk.

No, it doesn’t. The milk acquires the $1.98, but that is because it is the thing sold, not bought.

The $1.98 does not acquire the milk. (Bava Metzia 4th Perek)

The two sides of the transaction are not equal.

Money is whatever you are not worried about disposing of, or less worried about disposing of, and it is only the handing over of the goods – the thing sold – and not the money – that finalizes a transaction (according to Jewish law)

On the contrary. First of all, there was already a central bank. (its charter expired in 1811 and a seecond one was created in 1816 and Andrew Jackson vetoed an attempt to renew its charter in 1832. The danger of a bank is that its lending policy could be political, something we don’t have at all now, pretty much, a few political activists using code words notwithstanding)

Secondly his problem with Aaron Burr was that Aaron Burr was corruptly converting a project to bring water to New York City into a bank.

This was the Manhattan bank, later merged into the Chase/Corn Exchange as Chase Manhattan and now after a bunch of more mergers, J P Morgan Chase.

Back in February, we looked at Aaron Burr’s collaboration with Alexander Hamilton to form the Manhattan Company. This privately held entity would take on the task of bringing fresh water to the residents of New York City…..Milton Lomask, in the first book of his two-volume biography of Aaron Burr, went so far as to say that “…no member of the committee of six worked harder to make possible Aaron Burr’s upcoming triumph in the New York legislature.”

But Aaron Burr was lying to everyone about the Manhattan Company. Burr cared nothing about water, nor about piping it to residents of New York City (or any other city for the matter), nor about combating yellow fever.

Aaron Burr wanted a bank….

….Alexander Hamilton opposed the idea of state banks….he realized that local banks would become competitive for clients and, in their zeal for the most business, would dilute credit and resort to suspect lending practices to gain more accounts. This could ultimately lead to a melt-down of the financial system……

…Anyways, when the New York legislators saw the final bill, they failed to notice that Burr had removed all language dealing with repairing streets damaged by laying pipes and providing water for fire protection.

The Manhattan Company had become a front company….

…And on April 2, 1799, New York Governor John Jay unwittingly signed into law the creation of a bank able to compete with the Bank of the United States.

Aaron Burr had pulled off “the perfect crime”, and had done so in brilliant fashion. He manipulated his brother-in-law’s idea about bad water, used Alexander Hamilton as his mouthpiece, and duped New York’s legislature and governor.

Hamilton, of course, was furious….

…The summer of 1799 would see yellow fever rage through New York, and impure water being given to sick residents.

It’s little wonder that, less than two years later, when Jefferson and Burr were deadlocked in the Presidential election, Hamilton unabashedly wrote, “As to Burr, there is nothing in his favour…He is bankrupt beyond redemption, except by the plunder of his country.” ..

This was the origin of the feud. A couple of years later, Aaron Burr manipulated Alexander Hamilton into agreeing to a duel.

Note: it was believed that yellow fever was caused by bad water. Close, but no cigar. But other diseases are caused by drinking bad water.

It took about 40 more years to get a decent water supply to lower Manhattan.

More lies. Display your antisemitism, and you’re an antisemite, as well as ignorant and dishonest. And your pretense that this has something to do with disagreeing with me is transparent. How many people here have disagreed with me? How many have I called antisemites? For that matter, when have I ever got personal with anyone, except in response to personal attacks?

Milhouse, I don’t see what’s so hard to understand. The Fed can’t stop this expansion without causing the bottom to drop out of the treasuries market; prices would drop and yields would have to skyrocket.

Some people are calling the expected announcement (which has already been factored into the markets by analysts) QE4. It isn’t; it’s QE Infinity.

The $1 trillion dollar coin scheme is simply part of brainstorming to keep QE infinity going. And you can’t when everyone catches on to the fact that’s what you are doing.

The Fed is out of options. What they are doing isn’t working. They keep doing it because they have no “exit strategy.”

And, no, the money supply isn’t shrinking. There haven’t been official M3 figures published since 2006. But the money created doesn’t disappear. It may be hoarded in foreign central banks but it doesn’t go away. Any speculation the money supply is shrinking is just that; speculation on the part of unofficial sources. But it doesn’t pass the smell test.

Steve, the money supply certainly can shrink. That’s what it did in 1929, and that’s what caused the Great Depression. Page back on Patterico for the article claiming that that’s what’s happening now, and what Bernanke is trying to prevent.

Recent evidence suggests that a growing proportion of U.S. currency is held outside the country by individuals who are uncertain about their own currency’s future value. To these people, the dollar is a refuge during times of political and economic uncertainty. Knowing precisely how much currency is held outside the United States, however, is no simple matter. Unlike checking accounts, currency flows do not leave a paper trail. However, informal reports to the Federal Reserve and the U.S. Customs Department regarding currency flows abroad do provide a rough indicator of foreign demand.

Having some idea about the magnitude of overseas holdings is important for several reasons. First, if the demand for currency is becoming driven largely by foreign portfolio decisions, then fluctuations in the level of currency outstanding may have little to do with domestic economic activity.

When those foreign holdings come flooding back in these concerns over a shrinking money supply causing deflation will look beyond silly.

The sale of carbon credits were going to turn California’s economy around. Kali was going to be a “green” economic dynamo; a model for the nation. How’s that working out?

If you believe California officials, you might think the state’s long-running economic and budgetary problems are over, thanks largely to the flood of money from voter-approved increases in already high income and sales taxes.

The Legislative Analyst’s Office is exuberant, releasing a budget report declaring, “The state’s economic recovery, prior budget cuts and the additional, temporary taxes provided by Proposition 30 have combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges.”

…In late November, the California Air Resources Board held its first of these auctions, in which businesses such as oil refineries and utilities bid for credits that allow them to emit greenhouse gases. They must cut back their production or buy enough credits to cover all their emissions. Statewide emission caps will drop each year as California pushes businesses to produce fewer greenhouse gases or pay more to buy the declining number of credits for auction in this newly created government “marketplace.”

That is the plan anyway. “First cap-and-trade auction a bust for California budget,” read the headline in the Sacramento Bee. Budget planners expected that the state would receive $1 billion from the sale of credits, but the 2013 credits went for a low price and there was little demand for 2015 credits. As the Bee story explained, “The nonpartisan Legislative Analyst’s Office estimates that if trends hold in the February and May auctions, the state may only raise about $140 million in the first year.”

So they planned on raising $1 billion selling carbon credits in the first year, and they’re on track to sell $0.14 billion. If sales keep up the same awesome pace set at the out-of-the-gate auction.

This is par for the course for Kali “economic experts.” They are just dead wrong.

But don’t worry; “economic experts” who say the cap&trade geniuses are going to turn things around believe the trend will reverse as the “green” economic dynamo takes off.

“We expect over the next couple of years that we will add jobs,” said Robert Kleinhenz, chief economist with the Los Angeles County Economic Development Corporation. “This year, we’ve added jobs in California at a faster pace than in the nation as a whole. So, we are moving in right direction. As that happens, we’ll see the migration numbers turn around some.”

Frankly if I were in Kali I’d move out now just based upon the optimism of these “economic experts.” Considering they’re almost always 180dg out from reality.

By the same token if Bernanke is worried about deflation then I’d say the thing to worry about is inflation. When the deflation-averse Bernanke realizes he’s gone too far and tries to unwind his positions he won’t be able to.

That’s a hoot. As the ensuing article shows, there was never a plan. And they don’t have a clue how they’re going to get out of this mess. But what deflation-averse Bernanke has done is create inflationary fears.

A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month-old blueprint for an exit from record monetary stimulus.

It’s sort of putting lipstick on a hog to call what amounts to a sketch on a cocktail napkin a “blueprint.” But that’s par for the course from this administration.

“There is certainly an issue about unwinding the balance sheet” in a way that “is effective and continues to support the recovery without creating inflation,” St. Louis Fed Bank President James Bullard said in an interview in October. The central bank might have to “revisit” the 2011 strategy, he added.

The Fed is already buying $40 billion a month in mortgage- backed securities to boost the economy, and policy makers meeting Dec. 11-12 will consider whether to purchase more assets. John Williams, president of the San Francisco Fed, has proposed adding $45 billion of Treasury securities a month.

The bigger the balance sheet, “the riskier the exit becomes,” Richmond Fed President Jeffrey Lacker said during a Nov. 20 speech in New York. “That is something we need to think carefully about.”

Yeah guys, now is the time to start thinking carefully about all this. After creating Frankenstein’s monster, and deciding to double down and make it bigger, that’s just the time to think about controlling it.

If the Fed were to start bringing its holdings back to their pre-crisis level today, it would have to sell almost $2 trillion over a period of two to three years under its current exit plan. Assuming holdings grow to $4 trillion, asset sales could come to $3 trillion over the same period.

I’m sure the Treasury and the Fed won’t be competitors as they’re both trying to sell US debt at the same time, what with the huge demand for all that debt.

Demand that’s so huge…the Fed had to buy the vast majority of the supply to artificially boost prices.

There’s a lot of talk about “tools” at the Fed’s disposal, as if these craftsmen know how to use them. But there are no tools; the people assigned to creating them have no idea what to do. But they’re trying to portray the image of a certainty that just doesn’t exist.

From an earlier paragraph:

“The more they add to the balance sheet, the longer it will take to normalize,” said Hanson, who worked on designing tools that will be used in the Fed’s exit strategy as an economist in the monetary affairs division at the Board of Governors in 2009.

Juxtapose that with the final sentence of the article.

“We are deep into experimentation at this point,” Oliner said. “It’s understandable that people are worried.”

As a UT economist I was talking to after he had a meeting at the Dallas Fed put it, no one’s written the textbook that covers this. This’ll make the fiscal cliff look like the bunny hill at the local ski resort. These guys are in totally uncharted territory given the size of this mess and they plan on making it at least $1 trillion dollars bigger as they try to figure out how to get off the bull they’re riding.

The Fed is also buying up $40 billion of the $140 billion of the mortgage-backed debt the GSEs sell each month.

So they are buying about double of that $45 billion in terms of US debt. But it’s not all treasury debt.

It’s just insane to think the Fed can sell $3 trillion dollars in US debt to unwind its balance sheet over a 2-3 year period starting in 2015 while the Treasury and the GSEs are still selling debt.

Because their largest purchaser, the Fed, will no longer be buying but selling. Selling to whom? Who’s the market supposed to consist of if it’s no longer the Fed?

I can’t explain how it’s supposed to work. But then, no one can explain how it’s supposed to work. It’s never been done.

I’d wager that the Obama administration will kick the can down the road until the end of 2016. So the Tunguska impact of economic catastrophes will happen on someone else’s watch and he can blame his successor.

I would have won my wager; after the FOMC the Fed announced they’ve scrapped the whole idea of a target date to unwind their balance sheet:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.

…To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance.

What ails the economy will not be cured by the Fed’s remedies. They’re going to keep pretending they know what they’re doing through Obama’s second term and drop this load of crap into their successor’s lap.

Then pretend this mess they’re creating has nothing to do with them (Jay Carney’s universal BS: we do know that this has nothing to do with the Obama administration or its policies) and whoever came after them screwed up what they had no idea how to fix but did know how to make worse.

I like this part. As demand for US treasuries continue to drop due to the obvious fact that the administration intends to monetize the debt this leaves room for the Fed to buy a larger percentage of supply to artificially prop up demand.